RBI/2025-26/88, A.P. (DIR Series) Circular No. 11, dated October 01, 2025, addresses all Authorised Dealer Category-I Banks regarding Merchanting Trade Transactions (MTT). The circular reviews the time period for outlay of foreign exchange, referencing A.P. (DIR Series) Circular No.20 dated January 23, 2020, which stated that the entire MTT should be completed within nine months, with no foreign exchange outlay beyond four months. The commencement date is the date of shipment/export leg receipt or import leg payment, whichever is first, and the completion date is the date of shipment/export leg receipt or import leg payment, whichever is last. The new circular increases the time period for outlay of foreign exchange from four to six months to facilitate merchanting traders. All other directions from the previous circular remain unchanged. This instruction is applicable with immediate effect, and AD banks should notify their constituents and customers. These directions are issued under sections 10(4) and 11(1) of FEMA, 1999 and are without prejudice to required permissions/approvals. For further information, contact the Foreign Exchange Department, Central Office, 5th Floor, Amar Building, Sir P.M. Road, Fort, Mumbai – 400 001, via telephone at (91-22) 22603000 or email at fedcotrade@rbi.org.in. N. Senthil Kumar, Chief General Manager.
Key Entities Referenced
Merchanting Trade Transactions (MTT): The primary subject of the circular, concerning the time period for outlay of foreign exchange.
Reserve Bank of India: The issuer of the circular and the regulatory authority.
Foreign Exchange Management Act (FEMA), 1999: The act under which the circular's directions are issued.
A.P. (DIR Series) Circular No.20 dated January 23, 2020: A referenced policy document being updated by this circular.
Authorised Dealer Category-I Banks: The entities to whom the circular is addressed.
बेटी बचाओ
बेटी पढ़ाओ
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
RBI/2025-26/88
A.P. (DIR Series) Circular No. 11 October 01, 2025
All Authorised Dealer Category-I Banks
Madam / Sir,
Merchanting Trade Transactions (MTT) – Review of time period for outlay of
foreign exchange
Attention of Authorised Dealer Category – I banks (AD banks) is invited to Para 2 (vi) of
A.P. (DIR Series) Circular No.20 dated January 23, 2020 wherein it has been indicated
that ‘The entire MTT shall be completed within an overall period of nine months and there
shall not be any outlay of foreign exchange beyond four months. The commencement
date of merchanting trade shall be the date of shipment / export leg receipt or import leg
payment, whichever is first. The completion date shall be the date of shipment / export
leg receipt or import leg payment, whichever is the last’.
2. On a review and in order to facilitate merchanting traders to manage their MTT
efficiently, it has been decided to increase the time period for outlay of foreign exchange
from four to six months. All the other directions indicated in the Circular referred above
shall remain unchanged.
3. The above instruction is applicable with immediate effect. AD banks may bring the
contents of this circular to the notice of their constituents and customers concerned.
4. The directions contained in this circular have been issued under sections 10(4) and
11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are
without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(N. Senthil Kumar)
Chief General Manager
वर्देशी मुद्रा वर्भाग, केंद्रीय कायावलय, 5र्ी ींमींविल, अमर भर्न, सर पी.एम.रोड, फोर्व मुींबई - 400 001
Foreign Exchange Department, Central Office, 5th Floor, Amar Building, Sir P.M.Road, Fort, Mumbai – 400 001
Telephone: (91-22) 22603000, Email Id – fedcotrade@rbi.org.in
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